Mayor Bloomberg Demands SAIC Pay Back $600 Million In Cost Overruns For NYC Computer System

from the good-for-him dept

Over the years, we've chronicled a number of absolutely ridiculous over-budget computer systems for government agencies. My favorite still remains the FBI computer system -- which was over budget by hundreds of millions of dollars, was useless at finding terrorists, was so bad that a contractor had to use some free internet tools to hack into the system just to get his work done, and was so confusing that a computer science professor who reviewed the system said he and some others thought of going on a crime spree the day the FBI switched over. That system was built by SAIC, and the FBI ended up scrapping it and starting from scratch. But, as far as I know, the FBI never asked SAIC for the $600 or so million in taxpayer money it spent on the system back.

Apparently, NYC Mayor Michael Bloomberg has had a similar experience with SAIC and the new computer system for NYC it's been building. But, Bloomberg is a businessman by trade, rather than a politician, so when a company charges you $600 million (way overbudget from the original $63 million), he knows that you ask for your money back. So that's what he's doing. He's demanding a $600 million refund from SAIC. Part of the issue is that, as with many of these type of projects, there appears to have been significant fraud involved:

The recent indictment of SAIC's leader project manager on the CityTime job, Gerard Denault, as well as the guilty plea to criminal charges made by SAIC systems engineer Carl Bell, who designed the software, are "extremely troubling and raise questions about SAIC's corporate responsibility and internal controls to prevent and combat fraud," he added. Denault and Bell were charged with were charged with taking kickbacks, wire fraud and money laundering.

Also recently indicted were Reddy and Padma Allen, a couple who head up New Jersey systems integrator TechnoDyne, which was SAIC's primary subcontractor on the CityTime project. Federal authorities allege that the Allens and others conducted an elaborate overbilling and kickback scheme that siphoned millions of dollars from the project.

Federal authorities have also contended that SAIC had received a whistleblower complaint about the project as far back as 2005, Bloomberg said in the letter. "It is unclear what SAIC did at that time to investigate these serious allegations."

I would imagine that SAIC has no interest in paying back $600 million, but it could make for an interesting lawsuit if Bloomberg decides to press the matter.

Re:

I'm sure they thought SAIC had learned from their mistakes, which seems like a fair assumption. I mean, it is just as reasonable as paying 9.5x the original quote (which likley had a profit cusion already built in).

Stupid fuckers should have hired three companies to build seperate systems and then picked the best one to use. The incentive for the builders would be the ongoing maintenance and equipment replacement contracts for whoevers design was chosen.

Government Designed Systems

Having worked on Government software projects for the last decade, I am here to tell you that this isn't the whole story.

Sometimes it is true that contractors come in and milk the contract for cash without any interest in delivering a usable system.

Most of the time, contractors do everything in their power to chase ever moving, ever changing requirements. At the same time, restrictions on code development methodologies force them into continual modifications of increasingly cryptic code bases, until there is just no hope.

I have no knowledge of this system in particular. However, I'd double down on any bet that NYC's specifications, restrictions, and moving requirements are really at fault.

Re: Government Designed Systems

I can vouch for this phenomenon.

There seems to be a continual inability of the client to accurately specify their requirements... and the larger the number of "managers" the greater the shift in requirements. As government agencies everywhere in the United States are bloated--mainly with useless middle managers seeking to justify their existence--the requirements become an ever moving target.

Re: Re: Government Designed Systems

Don't forget the economics. When it's someone else's money you're spending, you spend more of it. In a lot of these agencies, spending more money is actually good for your career.

Oh, and to even get into a position in one of these agencies where you'll be put in charge of such a contract, you'll have to be a master at a number of skills that are not business, cost-cutting or engineering.

Re: Re: Government Designed Systems

While it's true that a client can fail to accurately specify their requirements, it's also been my experience that the consultants rarely make an effort to nail down those requirements by asking the right questions and assisting the client in trying to figure out what their goals and requirements actually are. They are getting paid the big bucks to be help the client get to where they want to be not just to build a system.

Re: Re: Government Designed Systems

The client may be NYC, but the "sub-clients" like NYPD, NYFD, schools, etc., all want their own specifications built in.

I work for a defense contractor, and while at a military health systems helpdesk, we dealt with Army, AF, and Navy with all sorts of applications like CHCS, DMHRSi, AHLTA, CCQAS, et al. And for each application, you had to build into the software specs for each branch of service since they couldn't agree on one format.

I'm guessing the same thing is happening in NYC with all the cities agencies wanting their own personal look to it all.

This doesn't excuse SAIC from what its employees did, and they ought to be held liable. They should give back the money & provide a working system.

And on a personal note, when we lost the MHS contract to HP/SAIC due to them vastly underbidding, I was 2 days away from accepting the job with SAIC before LM offered me another position.

Re: Re: Re: Government Designed Systems

According to Bloomberg's letter the city does have in place a working system.

And, yes, multi-agency SOWs are the worst, with each having its own perceived needs that each insist be worked into the contract.

You were fortunate LM offered you another position. Far too often the loss of a contract = loss of charge number = loss of job. I daresay few people realize the precarious position those who are "directs" are in.

Re: Re: Government Designed Systems

Most of the time, contractors do everything in their power to chase ever moving, ever changing requirements. At the same time, restrictions on code development methodologies force them into continual modifications of increasingly cryptic code bases, until there is just no hope.

and...

There seems to be a continual inability of the client to accurately specify their requirements...

Re: Re: Re: Government Designed Systems

Government contracting is wholly unlike the typical consumer market. In some respects it is similar to a major public works project where the contracting government (local, state, federal) keeps changing the requirements, seemingly by the hour.

Re: Government Designed Systems

Having worked on various government software projects myself I agree that many times the issues is related about changing requirements. But, the reason for the changing requirements is because of so much infighting between the shareholders. This of course means more money for the software contractor.

Re: SAIC

You say "same old. same old." Until recently the company was owned by its employees, which to me means that you must have at one time been an owner.

I was SAI's/SAIC's outside counsel for many years, and while perhaps I dealt with other programs, I never met a single person, from the most lowly up to Bob who founded SAI, who was anything other than honest, hardworking, and dedicated to doing the very best job they were able to do.

Re: Re: SAIC

Obviously, things have changed there, and very much for the worse. Anyone who engages them in a private or government contract now had better have another job lined up outside government, maybe with some company like...........SAIC?